Washington apple farmers brace for impact after Mexico imposes tariffs on U.S. imports

Originally published June 5, 2018 at 8:02 am
Updated June 5, 2018 at 3:34 pm

Mexico is the biggest foreign customer for Washington apples, so its new import tariffs will be felt by Northwest growers. (AP Photo/Elaine Thompson)

Mexico slaps tariffs on U.S. products days after U.S.-imposed tariffs on Mexican products went into effect. Washington exports up to $250 million worth of apples every year, and Mexico is the biggest customer.

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Washington’s apple growers are looking for new markets to make up for the expected loss of business after Mexico, their biggest export customer, imposed tariffs on purchases, a growers’ representative said.

Mexico announced Tuesday it will levy tariffs on imports of U.S. products. The order stipulates charges of 15 percent to 25 percent on U.S. farm goods including pork, cheese, apples and potatoes, bourbon whiskey and cranberries. The move follows a U.S. decision to impose tariffs on imports of Mexican steel and aluminum purchases, which took effect on Friday.

Washington exports apples valued at $200 million to $250 million to Mexico every year, representing 10 percent of its total market, Todd Fryhover, president of the Wenatchee-based Washington Apple Commission, said Tuesday morning. That makes it by far the biggest market for the state’s apples.

“I don’t know that it was unforeseen,” Fryhover said. “Everybody has been predicting this because of the steel and aluminum tariffs.”

The vast majority of the state’s apples are grown on irrigated lands east of the Cascades in counties where Trump had strong support in the 2016 election. Ric Valicoff, a grower in the Yakima Valley, said he continues to back the president in trade negotiations with Mexico.

“I think the administration is correct in trying to correct long-overdue trade imbalances. It’s not just apples. It’s pretty much everything. If we all stick together and absorb some of the hits, at the end of the day we’ll come out successful,” he said.

Valicoff said Mexico has an economic stake in the Washington apple harvest, since many Mexican workers — hired on temporary work permits — are employed in the fruit industry, and send much of their wages back to their home country. Valicoff, who is vice president of the 1,700-acre Valicoff Fruit Company, has employed 96 Mexican workers since January and soon will hire another 86.

He said it’s too early to predict the size of this year’s harvest, but that unusual heat in May caused what he called a “flash bloom,” in which the blossoms didn’t pollinate as well as in years past, so that could affect the size of the crop.

Washington is also the nation’s second-largest producer of potatoes, after Idaho, and the state’s overall exports of potatoes were worth $756 million last year, slightly higher than total apple exports, according to census data.

Matt Harris, director of governmental affairs for the Washington Potato Commission, said Mexico is imposing a 20 percent tariff on frozen French fries from the United States. Those exports to Mexico were worth $137 million in the 2017 calendar year, with Washington state supplying $36.9 million.

Mexico ranks seventh among export markets for Washington potatoes, according to the state Department of Commerce.

“In Mexico, we have seen gains where we are improving our market,” Harris said.

In recent months, there has been a lot of talk from China and other nations about potential tariffs affecting agricultural products, but this is the first one to target U.S. potatoes, according to Harris.

“We are talking with our congressional members. We want to make sure they are informed about what this looks like,” Harris said.

Mexico, according to a resolution published in its Official Gazette early Tuesday, will slap tariffs of 25 percent on certain cheese products, steel and Tennessee whiskey, while imposing taxes of 20 percent on pork, apples and potatoes.

The escalating trade tensions come at a time when the renegotiation of the North American Free Trade Agreement, or NAFTA, looks likely to be delayed until later this year or into 2019. In addition, Mexico is set to elect its next president on July 1 and Andres Manuel Lopez Obrador, a leftist firebrand who has argued for more reliance on domestic production, is firmly in the lead with a margin of as much as 20 percentage points, according to the Bloomberg Poll Tracker.

Mexico said yesterday that it will complain to the WTO over the U.S. measures, saying that they violate the organization’s agreement on safeguards by not having been adopted in accordance with the procedures provided, in addition to violating the General Agreement on Tariffs and Trade. The U.S. tariffs have been condemned by nations across the world, with Canada, America’s other partner in NAFTA, last week announcing it will impose tariffs on as much as $12.8 billion of U.S. steel, aluminum and other products from July 1.

The U.S. last week said it’s levying the new metals duties on imports from the nations and the European Union on national security grounds, ending their temporary exemptions.

Fryhover said Washington’s apple industry will shift its focus to increase sales to U.S. markets and to countries that don’t have import tariffs.

“Plans have been laid in place,” he said. “We’ll see what happens. Farmers are hard workers, innovative people and risk-takers.”

Seattle Times business staff and Bloomberg News contributed to this report.